The state of nature in the shadow of contract formation: Adding a missing link to J.M. Buchanan's social contract theory

The social contract theory of J.M. Buchanan provides no clear-cut answer on the question which one of the multitude of possible Pareto-efficient contracts is chosen by individuals who shape a contract in an (imaginary) state of nature. This deficiency is remedied in this paper by adding the Nash-bargaining theory. It seems to be in line with at least part of Buchanan's reasoning. Whereas for Buchanan the configuration of contract depends unilaterally on the natural equilibrium of the state of nature, we are able to show that the parties' (rational) contractual expectations have repercussions for their behavior in the state of nature. That is why the location of the natural equilibrium proves to be heavily dependent on the chosen bargaining theory. The implication is that assessing the legitimacy of a given constitutional order or contract (on the basis of the natural equilibrium) depends on the particular bargaining theory chosen to solve the underlying constitutional distribution problem. I am grateful to D. Andrews, D. Schmidtchen and U. Witt for helpful comments on earlier drafts. The usual caveat applies.     

Delegation without Agency Loss? The Use of Performance Contracts in Danish Central Government

Performance contracts entered between ministerial departments and their agencies are used throughout the Danish central government. The article analyzes the use of performance contracting in 2005. The analysis draws on transaction cost theory and actor-centered institutionalism, stressing the bargaining aspect of hierarchy and the importance of economic and political transaction costs. The analysis shows considerable variation in the content of performance demands. Ministries with different organizational designs use contracts in markedly different ways and agencies with a strong interface to individual citizens and businesses are more likely to meet demands regulating policy delivery and service levels. Further, contracts contain substantive clauses, the terms of which are largely assessable. It also shows that performance contracts only rarely specify demands related to cost efficiency within agencies. Many of these results are statistically significant, even though a general point is the wide variation in the implementation of performance contracts between individual ministries.     

Workplace Relations and Agreement Making in the Australian Public Service

The Howard government has introduced major change to APS employment relations. The long-established centralised system has been replaced by a new employer agenda. Negotiations now occur at agency level and are regulated, as in the private sector, by the Workplace Relations Act 1996. Freedom of association is emphasised, as is the right for individuals to settle contracts with their employer. While the transformation is not yet complete, government policy is pushing toward a new paradigm for bargaining in the public sector.     

Assessing labour freedom in agriculture: Developing world perspective focusing on India

This piece of work evaluates the choices and opportunities opened up in rural labour market through institutional reforms and developmental policies fostering agricultural growth and efficiency in developing countries, with a focus on India. It finds that policy reforms on property rights, involving legal approvals of land ownership or partial possession with rental contracts, strengthen bargaining capacity among marginalized groups. Furthermore, an inclusive development policy encompassing the rural sector shapes labour freedom by stabilization of market at desirable wage and employment rates. Considering a case example from an advanced agricultural region in India, this study reveals a positive and significant relationship between intensity of labour freedom and land-based status of peasant households. The analysis of primary data suggests that labour market reforms, particularly those focused on wage contracts and minimum wage laws, off-farm jobs and intra-migration employment opportunities before labourers, are crucial indicators for enhancing labour freedom in rural areas.     

Optimal Central Banker Contracts and Common Agency

This paper considers the contracting approach to centralbanking in a simple common agency model. We suggest thatcentral banker contracts that do not consider the possibilityof more than one principal existing are incomplete contracts.Such incomplete contracts can be a poor form ofmonetary policy delegation under common agency. We develop amodel with two principals – society (government) and ageneric interest group, whose objective conflicts withsociety’s ex ante preferences by incorporating an inflationarybias. We determine when the government-offered orinterest-group-offered contract dominates the central banker’sdecision. The results largely depend on whether theinterest-group-offered contract is written in terms of outputor inflation.     

Governing by contract as a way to reduce crime? An impact evaluation of the large-scale policy of security pacts

Policy Sciences - In the last decades, governing by contracts, and in particular security contracts and pacts, has been increasingly promoted as a principal means of advancing crime prevention and...     

我国不同级别公务员心理契约的差异性分析

重点研究了我国政府中行政管理部门的公务员心理契约问题,主要目的是了解公务员心理契约所包含的要素、不同级别公务员对这些要素的重视程度和建立公务员的心理契约结构模型.在两轮问卷调查的基础上,明确了组织与公务员之间相互期望的各10个要素.利用t统计检验,表明不同级别公务员对期望要素的认识有显著的差别.应用因子分析方法,建立了公务员心理契约的结构模型,该模型显示组织与公务员之间双向心理契约共包含了8个主要方面.研究的主要结论是:盈利组织的心理契约与非盈利组织的心理契约之间的差异是明显的,不同级别的公务员对心理契约中的要素重要性认识程度是不同的.我国各级公务员(从科员到厅局级)主要将敬业精神、诚实忠诚、职业前景和公平公正待遇放在心理契约要素的最重要位置上,而物质激励则处于次位.政府中的创新动力主要来自领导层面,而较低级别的公务员创新动力不足.这些研究结果对政府各级组织建立公平、透明的运作机制具有参考价值.同时为设计相应的激励制度提供了新的视角.最后提出了我国公务员心理契约需要进一步研究的问题.     

Endogenous bargaining power and the theory of small group collective choice

Contrary to some criticism (Musgrave and Musgrave, and West) the small group collective choice model may yield a determinate, Pareto optimal solution even with all or none bargaining. Such bargaining as well as the solution are implied by the basic assumptions of the theoretical model.     

Collective Bargaining and The Performance of the Public Schools

Students of American politics rarely study public sector unions and their impacts on government. The literature sees bureaucratic power as rooted in expertise, but largely ignores the fact that bureaucrats often join unions to promote their own interests, and that the power of their unions may affect government and its performance. This article focuses on the public schools, which are among the most numerous government agencies in the country, and investigates whether collective bargaining by teachers—the key bureaucrats—affects the schools' capacity to educate children. Using California data, analysis shows that, in large school districts, restrictive labor contracts have a very negative impact on academic achievement, particularly for minority students. The evidence suggests, then, that public sector unions do indeed have important consequences for American public education. Whether they are consequential in other areas of government remains to be seen, but it is an avenue well worth pursuing.     

Bargaining unexplained

Is there a bargaining equilibrium comparable to the equilibrium in the competitive economy? The claim in this paper is that there is not. Bargaining models with well-specified equilibria have been built upon a shared sense of what is fair, concessions in proportion to harm from failure to agree or an imposed bargaining procedure. The claim is that these models either come dangerously close to assuming what they seek to prove or define bargaining as something other than what it is commonly understood to be. We know that people strike bargains and that civilized life could not proceed otherwise, but something over and above pure self-interest is required for bargaining and compromise to take place.     

Selling Oneself into Slavery: Mill and Paternalism

'Voluntarily acceding to slavery', Joel Feinberg has written, 'is too much for Mill to stomach', and so Mill espouses strong paternalism and contradicts his famous principle of individual sovereignty. Mill's critics have found incoherence where none exists, largely because they have failed to take seriously his own claim that the non- enforcement of slavery contracts is required by the principle of liberty. The refusal to enforce such contracts arises not from Mill's espousal of paternalism, but from the paradox of sovereignty. Reconstruction of Mill's solution to this paradox not only dispels the charge that he abandoned the sovereignty of the individual, but also contributes to the reinterpretation of his defence of freedom, as a result of which his entire doctrine of antipaternalism emerges as a coherent and defensible position.     

How and when do presidents influence the duration of coalition bargaining in semi‐presidential systems?

How and when do presidents influence the government formation process in semi‐presidential systems? Presidents have both a formal role and vested interest in the formation of the cabinet, yet their influence has been overlooked in studies of the duration of government formation. In this article, it is argued that the president's influence over government formation can be explained by his or her perceived legitimacy to act in the bargaining process and their partisanship. In this first case, it is argued that the legitimacy to act derives from a president's constitutional powers and more powerful presidents simplify cabinet bargaining, leading to shorter government formation periods. In the second case, it is proposed that presidents and their parties have overlapping preferences. Therefore, when the president's party holds greater bargaining power in government formation negotiations, the bargaining process is less uncertain and less complex. Thus, government formation processes will be shorter. Using survival models and data from 26 European democracies, both propositions are confirmed by the analysis. The results enhance our understanding of the dynamics of cabinet bargaining processes and contribute to the wider study of semi‐presidentialism and executive‐legislative relations. One broader implication of these results is that the president's party affiliation is an important motivation for them as political actors; this contrasts with some previous studies which conceive of presidents as non‐partisan actors.     

Coalition Termination in Norway: Models and Cases

This article focuses on coalition termination in Norway and explores the questions: Which issues are severe enough to bring down a coalition government? To what extent are coalition crises caused by a complex bargaining environment? On the basis of a unified model for government solution, three cases are examined: the termination of Borten II in 1971, Willoch III in 1986, and Syse in 1990. The analysis demonstrates that the complexity of the bargaining environment is conditioned by the dimensionality of the party system. The stability of coalitions is restricted by the cleavage structure and the ideological diversity of the system, as parties are polarized along several conflict dimensions. Terminal issues are fundamentally related to the parties' position in the policy space. In order to preserve party identity and unity, political parties change from a cooperative to a competitive strategy when issues belonging to the “heartland” of the parties concerned become salient.     

The Effects of Structures and Power on State Bargaining Strategies

When and why will states adopt more (or less) cooperative bargaining strategies? Standard answers to this question focus on the role of state power. Other scholars highlight socialization effects. I argue that in most international negotiations, the institutional bargaining structure will mitigate the effects of power and socialization, and drive state bargaining behavior. Factors highlighted by formal models of international bargaining should therefore best explain the variation in the strategies states adopt. I introduce empirical measures of these abstract concepts, and test their effects against those of power and socialization using an original dataset of state bargaining strategies in the European Union (EU). The results show that structural factors best explain variation in the EU states’ bargaining strategies. I conclude by highlighting the conditions under which these effects should explain state bargaining behavior in other international negotiations, and discuss the implications of this argument for the study of international bargaining.     

Public‐Sector Unions and the Size of Government

Public‐sector unions are generally thought to increase the size of government through collective bargaining. This article challenges this idea for the case of teacher unions in the United States and argues that while collective bargaining institutions sometimes lead to increased education spending, this is not the norm. Using a new longitudinal data set spanning all states before and after they granted collective bargaining rights to teachers, the article shows that although states that mandate districts to bargain with teachers have higher education expenditures than states that do not, the differences precede collective bargaining. Difference‐in‐differences analyses find no evidence that introducing collective bargaining rights led to average increases in the level of resources devoted to education. Although existing theories cannot explain these null findings, the article shows one reason behind them is that most laws granting collective bargaining rights to teachers were not unambiguously prolabor, but included both pro‐ and anti‐union provisions.     

The portfolio allocation paradox: An investigation into the nature of a very strong but puzzling relationship

Abstract.  Perhaps the strongest empirical finding in political science is 'Gamson's Law': the near-perfect relationship that exists in parliamentary systems between a coalition party's seat contribution to the government and its quantitative allocation of cabinet portfolios. Nevertheless, doubts remain. What would happen if the salience or importance of the various portfolios was also taken into account? Should it not be the case that payoffs correspond with bargaining power rather than seat contributions? And perhaps most significantly, would addressing these issues produce evidence that the parties designated to form governments extract disproportionately large payoffs for themselves, as predicted by 'proposer' models of bargaining? Utilizing the results of a new expert survey of portfolio salience in 14 Western European countries, the authors of this article explore each of these questions. Their basic finding is that salience-weighted portfolios payoffs overwhelmingly mirror seat contributions, contra proposer models and any other models based on bargaining power. The article concludes with a discussion of the implications for formal models of bargaining.     

Individual rationality and bargaining

We argue that Nash’s solution to the bargaining problem should be modified such that it will be based on a New Reference Point (NRP). Such a point is needed so that a player is not considered ‘individually rational’ if he accepts an agreement that provides him with a utility lower than the minimal utility he can derive from any Pareto optimal agreement, or if he accepts an agreement that provides him a utility lower than the one he can obtain by unilateral action. The employment of such NRP requires modifying two axioms and hence leads to a new proposed solution.     

Verhandeln statt Argumentieren oder Verhandeln durch Argumentieren? Eine empirische Analyse auf der Basis der Sprechakttheorie

In a recent debate in German political science the terms ?bargaining and arguing“ have been construed as semantic opposites in the same dichotomous way as the terms ?strategic action and communicative action“ and ?game theory and discourse theory“. This paper rejects the notion of these dichotomies and presents a new theoretical approach to distinguish bargaining and arguing as modes of communicative resolution of conflicts. On the basis of speech act theory a method for the empirical analysis of bargaining and arguing processes is developed and demonstrated with an example of interest conflict resolution by mediation. Three conclusions can be drawn: First, in empirical processes of communicative conflict resolution, in almost all cases both arguing and bargaining will be present. Second, within the context of an interest conflict, arguing is not an alternative to bargaining, but a means for bargaining. Third, in the example in question a sequential structure could be observed: The resolution of disagreements over facts and values by arguing took place before the resolution of interest conflict by bargaining.     

Continuity and Change: The New South Wales Public Sector Under Labor

This paper analyses recent developments in wage bargaining in the New South Wales public sector under the Labor government. It contrasts the approach taken by the former Coalition government with that of its successor. The discussion is focused on the Memorandum of Understanding between the Labor government and the public sector unions. With the agreement of the unions, the government has reasserted both substantive and procedural control over public sector industrial relations. This has not, however, prevented widespread industrial action in schools, hospitals and public transport and continuing tensions between the principal public service union and the government.     

Non-global social contracts: A note on inefficient social institutions

This paper explores some perverse features that can emerge when social contracts are moved from a social vacuum to a setting of social interdependence. In particular we note incentives that might exist in conjunction with externality problems that yield situations in which: (1) social contracts reduce social wealth; (2) sub-global social contracts are Pareto inferior to the absence of social contracts; (3) there are no incentives for global social contracts. While previous works emphasized the benefits of contracts, this paper focuses on their costs. A conclusion reached is that perhaps justice and efficiency demand not a single global social contract but rather a rich melange of sub-global contracts with appropriate interstices of anarchy.